Panasonic Proposal
Victoria Connor
Economics ECO/561
Instructor : Dr. Robert Batiste
January 11, 2015
Panasonic Business Proposal
The present paper is in relation to mobile industry. The organization is working for the purpose of making sure that provides new product to the consumers. For producing new products to the consumers, it is most important for business organization to make sure that, it works for the purpose of enhancing the level of sales of organization. The business proposal regarding the new product has been made in the present situation. Along with business proposal, elasticity or inelasticity of organization, barriers to entry, differentiation with the competitors and non-price strategies of organization will be taken into consideration. Panasonic will also make use of certain non-pricing strategies. The non-pricing strategies will be used by organization to have more competition and increase the barriers to entry in the market.
New Realistic Product
Here, the organization Panasonic is coming up with an innovative new product in the market. A new realistic product selected in relation to the present situation is a particular form of mobile phone. The new mobile phone will be in the form of a wrist watch. This phone will have a large screen in comparison to other phones. This phone will display three HD videos or display one on a 3D screen and this phone will also be waterproof. With its light weight and sleek design, it will be easier for people to carry it with them (Samuelson, 2010). This particular product is likely to have better response from customers as it has a better feature in comparison to other mobile phones in the industry.
Economic Analysis
In relation to economic analysis, it is expected that the Panasonic will be in the position to have positive response from this particular mobile phone. The overall cost of manufacturing this mobile phone will be $2500 per mobile phone and organization expects to sell this mobile phone at a price of $3500. At the present time, total number of mobile phones in the world is around 90% of total population of the world. Therefore, it is expected that the people will be inclined to make sure that they make use of these mobile phones to a larger level for getting better results for them in the time to come. At the present time, mobile phones have become necessity or essential good for the customers. Therefore, the elasticity of demand regarding mobile phones will be inelastic. The demand of these products will change due to factors other than price of the product. If a new feature has been introduced in the product by the consumer then, there will be a situation that, the consumers will definitely move forward for the purpose of enhancing the level of purchase made by them.
Market Structure
In relation to market structure of mobile phone market, it has been provided that, the market is considered to be oligopoly form of market. In the United States of America, around 89% of the overall market is controlled by four organizations (Mankiw & Taylor, 2006). Organizations include Verizon, AT & T, Sprint and T-Mobile and Panasonic. This way, it is difficult for other organizations in the industry to move forward and have control over the market. It is important that, the product introduced in the market is of such kind that, the consumers are attracted towards the product to a larger level and look forward to purchase the same.
Hypothetical data
In relation to manufacturing of the new product, organization will need to make sure that, it considers the variable and fixed costs. Here, variable costs will be regarding the labor cost, material costs and overhead costs. Fixed costs to be incurred by organization in manufacturing of product will include costs such as salary to employees, marketing expenses, telephone expenses and electricity expenses. The variable costs for organization will be $1300 per product and fixed costs will be $1200 per product.
Relation of Price to Elasticity
At the present time, mobile phones in the market are considered to be necessity for the people around the world. In relation to mobile phones, it has been provided that, the people look forward to use the mobile phones as it is important for them to stay connected with the people around them. Though mobile phones have become necessary for the people, it cannot be said that, all the mobile phones are necessary. It is only the basic phones which help people to stay connected with each other that have become necessary for the people.
The elasticity of this mobile phone is above the unitary level. The price of this mobile phone is higher in comparison to other mobile phones in the market. If the price of mobile phone will be increased by Panasonic then, the demand of this phone will go down to a higher level in proportion to the price. In case Panasonic is able to make use of better technology and sells mobile phones at lower cost then, it will be possible for it to ensure that, mobile phone is sold at lower price. In such a case, the phone will be sold at a price which is lower and demand of this phone will increase (Wessels, 2006).
Effect on Marginal Cost and Marginal Revenue
Marginal cost is the change in cost of the product with increase or decrease in each unit of production. Marginal revenue is change in revenue of organization with increase or decrease in level of sales made by organization. If Panasonic will increase the price of the product then, marginal revenue will decrease and marginal cost will increase as the consumers will purchase lower of the products. In the other case, if price of product will be decreased by the organization then, there will be a situation that, quantity purchased by the consumers will increase. In this way, marginal revenue of organization will increase. Marginal costs for organization will also increase to a certain extent.
Non-Pricing Strategies
For promotion of products of the organization, it is important for an organization to make sure that, it considers the pricing as well as non-pricing strategies. In case of non-pricing strategy, organization is not engaged in changing price of the product for the purpose of enhancing sales of the product. Instead of change in price of product, organization makes use of certain other strategies.
In relation to non-pricing strategy, Panasonic will make use of methods such as higher level of advertising for the product. Regarding advertising for product, organization will ensure that, it gets its product endorsed by well-known celebrities. With the help of endorsement of product, it will be possible for organization to make sure that, it attracts customers towards its products to a larger level. Second non pricing strategy to be used by organization will be that it will improve the design of its mobile phone (Arnold, 2010). Regular change in color and design of this phone should be made to make this phone more users friendly. The consumers around the world are attracted towards mobile phones when they find it good from the exterior part. Organization can have increase in its sales with the help of this thing.
Non-Pricing Strategies to Increase Barriers to Entry
For increasing barriers to entry, non-pricing strategy to be used by Panasonic will be to get involved in merger and acquisition. This particular non pricing strategy is definitely going to help the organization a great deal as its position in the market will be enhanced with the help of this non pricing strategy. Panasonic may merge with AT & T if both the organizations agree to make the merger. Another non pricing strategy to increase barriers to entry will be to form a huge alliance.
Alteration in Fixed and Variable Costs
At Panasonic, the fixed and variable costs of the organization could increase to a certain level. Here, the organization is working for bringing new design and technology in the product provided by it to the consumers. Regarding the organizational product, there will be a situation that, with the new design of the product and new technology in the product, the fixed costs for the organization will increase. With the increase in fixed cost, there will also be increase in the variable costs. Regarding variable costs, more material and higher number of labor will be required by organization to carrying out the activities in a proper manner. These things will certainly help organization to enhance the quality of its products and selling the same to the customers.
Conclusion
Here, a business proposal regarding a new kind of mobile phone was introduced by Panasonic. The new mobile phone is in the form of a wrist watch. Organization needs to consider elasticity of demand regarding the price. It should also make use of certain non-pricing strategies. With the use of non-pricing strategies, organization will have better position in the market. The organization will have some kind of impact on fixed and variable cost incurred by it towards the product provided by it to the consumers in the future.
References:
Arnold, A.R. (2010). Economics. (10th ed.). Cengage Learning.
Mankiw, G.N. & Taylor, P.M. (2006). Economics. Cengage Learning EMEA.
Samuelson, A.P. (2010). Economics. Tata McGraw-Hill Education.
Wessels, J.W. (2006). Economics. Barron's Educational Series.
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